1. 16-1
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
CHAPTER
Supply Chain and
Channel Management
16
Copyright © 2014 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

2. 16-2
L E A R N I N G O B J E C T I V E S
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Understand the importance of marketing
channels and supply chain management.
Understand the difference between direct
and indirect marketing channels.
Describe how marketing channels are
managed.
Describe the flow of information and
merchandise in the marketing channel.
Supply Chain and Channel Management
LO1
LO2
LO3
LO4

3. 16-3
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Supply Chain Management

4. 16-4
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Marketing Channels Add Value
Reduce number of
transactions
Increase value for
consumers
More efficient and
effective
©Brand X Pictures/PunchStock

5. 16-5
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Marketing Channel Management Affects
Other Aspects of Marketing
Fulfilling delivery promises
Meeting customer expectations
Reliant on an efficient supply chain
Courtesy Zara International, Inc. Courtesy Zara International, Inc.

6. 16-6
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Designing Marketing Channels

7. 16-7
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Types of Vertical Marketing Systems
Administered
vertical
marketing
system
Corporate
vertical
marketing
system
Contractual
vertical
marketing
system

8. 16-8
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Managing Marketing Channels and Supply
Chains Through Strategic Relationships
Strategic
Relationships
Mutual Trust
Open
Communications
Common Goals
Interdependence
Credible
Commitments

9. 16-9
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
1. What are the differences between an indirect
and a direct marketing channel?
2. What are the differences among the three
types of vertical marketing systems?
3. How do firms develop strong strategic
partnerships with their supply chain
partners?
CHECK YOURSELF

10. 16-10
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Making Information Flow
through Marketing Channels

11. 16-11
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Data Warehouse

12. 16-12
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Electronic Data Interchange
Cycle time
Quality of
communications
Easily analyzed
and used
PhotobyCabela’s

13. 16-13
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Vendor-Managed Inventory
DH Kong/Plush Studios/Getty Images

14. 16-14
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Pull and Push Supply Chain
Pull
• Orders based on
sales data
• More accurate
inventory
• Better when demand
is uncertain
Push
• Merchandise
allocated based on
forecast
• Does not need
sophisticated IS
system
• Good for steady
demand items

15. 16-15
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
1. What are the marketing channel links
associated with each information flow?
2. How do marketing channel members use
data warehouses to make decisions?
3. What is EDI and how is it used?
4. Why do some marketing channels use VMI,
while others do not?
5. What is the difference between push and
pull supply chains?
CHECK YOURSELF

16. 16-16
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Making Merchandise Flow
Through Marketing Channels

17. 16-17
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
The Distribution Center
Shipping to store
Preparing to ship
Getting Merchandise Floor Ready
Storing and Cross-Docking
Receiving and checking using UPC and RFID
Management of inbound transportation

18. 16-18
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
1. How does merchandise flow through a
typical marketing channel?
2. What activities occur in a distribution center
and what technologies facilitate those
activities?
3. Why have just-in-time supply chain systems
become so popular?
CHECK YOURSELF

19. 16-19
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Merchandise cartons that are cross-docked are
prepackaged by the vendor for a specific store.
Glossary

20. 16-20
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Manufacturers can ship merchandise either
directly to a store or to a distribution center,
where it is then shipped to the store.
Glossary

21. 16-21
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Electronic data interchange (EDI) is the
computer-to-computer exchange of business
documents from a retailer to a vendor and back.
Glossary

22. 16-22
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Just-in-time inventory systems are inventory
management systems designed to deliver less
merchandise on a more frequent basis than
traditional inventory systems.
Glossary

23. 16-23
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Radio frequency identification (RFID) tags are
tiny computer chips that automatically transmit
to a special scanner all the information about a
container’s contents or individual products.
Glossary

24. 16-24
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
A strategic relationship or partnering
relationship involves the supply chain
members being committed to maintaining the
relationship over the long term and investing in
opportunities that are mutually beneficial.
Glossary

25. 16-25
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Supply chain management is a set of approaches and
techniques firms employ to integrate their suppliers,
manufacturers, warehouses, stores, and
transportation intermediaries into a seamless
operation in which merchandise is produced and
distributed in the right quantities, to the right locations,
and at the right time, as well as to minimize system
wide costs while satisfying the service levels that their
customers require.
Glossary

26. 16-26
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Vendor-managed inventory (VMI) is an
approach for improving supply chain efficiency
in which the manufacturer is responsible for
maintaining the retailer’s inventory levels in
each of its stores.
Glossary